Monday, November 08, 2004

"This is a big green light to sell the dollar," said David Bloom, currency analyst at HSBC, as the greenback fell to a nine-year low in trade-weighted terms...

However, the market has been rife with rumours that the latest wave of selling has been led by foreign governments seeking to cut their exposure to US assets.

India and Russia have reportedly been selling US assets, as well as petrodollar-rich Middle Eastern investors.

China, which has $515bn of reserves, was also said to be selling dollars and buying Asian currencies in readiness to switch the renminbi's dollar peg to a basket arrangement, something Chinese officials have increasingly hinted at. Any re-allocation could push the dollar sharply lower and Treasury yields markedly higher.

Ah, to be on the winning side of a hedge. Unfortunately, many Americans are going to see their wealth deteriorate further, and while I would have lost money had Bush not kept the presidency, I will at least take comfort in knowing my IRA's and 401(k) plans are going like gangbusters.